How delayed acquisition of 2 indigenous weapons systems has sent Indian defence into a tailspin

The Akash Surface to Air Missile (SAM) and Pinaka Multi Barrel Rocket Launcher (MLRS) are shining stars on the bleak Indian defence landscape where nearly 70 per cent of defence equipment is imported. This is because these two completely indigenous weapon platforms go even beyond the NDA government’s Make in India programme, where equipment can be assembled within the country by a foreign company that owns the designs.

Yet, for over a year now, orders worth over Rs 19,000 crore for these indigenously designed developed and manufactured (IDDM) weapon systems have been caught up in South Block’s red tape. The armed forces’ intent to buy additional Akash and Pinaka systems are yet to translate into contracts.

The armed forces need both vitally. The Indian Air Force needs the Akash – a supersonic, all-weather surface-to-air missile which can shoot down enemy aircraft, helicopters, drones and cruise missiles 30 kilometres away – to protect airfields and vital installations. Its Pechora missiles acquired from Russia over 30 years ago are nearing the end of their lives; the army needs six more Pinaka regiments to augment its firepower. A single salvo from a Pinaka regiment of 18 launchers can saturate an area of one square kilometre, 35 km away.

But it is within Indian industry that these indigenous platforms have delivered their true force multiplier effect. The Akash system is over 96 per cent indigenous and sources its components from 330 Indian industries. The Pinaka, 92 per cent local, supports 43 Indian industries.These orders are so substantial and the downstream effect on the defence ecosystem so huge that one private sector CEO calls them the equivalent of a stimulus package for Indian industry, a massive booster shot that would create jobs in the high-tech sector, spur innovation and garner huge tax revenues for the government. And it is here that the delays are making their absence felt.This, particularly since the outlook for three other massive ‘Make India’ projects for the army-exclusively meant for Indian industry, both public and private sector-is so bleak and the progress on them so slow that industry has stopped bothering about them. The orders for the Futuristic Infantry Combat Vehicle (FICV), a Rs 26,100 crore project to replace all of the Indian army’s 2,600 BMP Infantry Combat Vehicles, Tactical Communication System (TCS) and the Battlefield Management System (BMS), were meant to seamlessly integrate soldiers with their fighting formations and transform the way the Indian army fought wars when they were mooted a decade ago. They called for consortiums of public and private sector industry working to develop indigenous prototypes that would then be turned into series production.

These projects, collectively worth over Rs 1 lakh crore or one percentage point of India’s GDP, would have delivered a substantial long-lasting boost to indigenous industry, particularly the development of indigenous electronics and spurred job creation. One private sector CEO estimates that every Rs 1 crore invested into the Indian industry has the effect of creating 25 jobs-six in the high-tech sector and 20 in the unskilled sector. “In the past 11 years, not one of these projects, FICV, BMS or TCS, has moved to the development stage, forget production,” the CEO says.

The DRDO’s indigenously developed Advanced Towed Array Gun Systems (ATAGS), a 155×52 mm towed howitzer developed with the private sector, saw one of its prototypes shoot a shell out to 48 km at the Pokharan test ranges on September 15, a world record for a gun of its class. But this gun, too, is still years away from mass production.

The only substantial Make in India programme in the three-and-a-half year term of the NDA government has been a Rs 4,500 crore order for 100 K-9 Vajra-T 155/52 self-propelled artillery guns placed on a consortium of private sector L&T and South Korea’s Hanwa Tecwin. L&T undertook to manufacture all 100 guns within the country, effectively converting a ‘Buy and Make’ project into a Make in India project.

The sole low-hanging fruit for Indian industry in the near term are repeat orders of the Akash and Pinaka. But thanks to bureaucratic delays, it now seems that even these aren’t coming in a hurry.

The Union ministry for defence sent out requests for proposals (RFPs) for six regiments of Pinaka MBRLs worth approximately Rs 4,500 crore in March this year. The two firms, Tata Power SED and L&T, submitted their bids in April 2017. As per the terms of the RFP, the lowest bidder will get four systems and the other bidder, two systems. The rockets, which cost approximately Rs 3,000 crore, are to be ordered separately from the Ordnance Factory Board (OFB). Seven months later, the bids are yet to be opened and a Pinaka order seems unlikely before March 2018.

A similar fate seems to have befallen the Akash. The order for seven squadrons of Akash short range missiles for the IAF worth Rs 6,000 crore is still in the pipeline nearly 15 months after it was mooted by the government.

The IAF is presently conducting a cost audit of the Akash, first of prime contractor Bharat Electronics Limited (BEL) and later of Bharat Dynamics Ltd (BDL), which manufactures the missiles. Project officials say the meetings have been dragging on endlessly for over a year now and the IAF is believed to have questioned the high price of the Akash. In September, IAF officials at a meeting within Air Headquarters even questioned the utility of the Akash when the IAF was getting five S-400 ‘Triumf’ SAM missiles from Russia which had a range of over 400 km. The comparisons, project officials point out, are unfounded. The Akash is a point-defence missile while the S-400 is an area defence weapon.Akash, part of the Integrated Guided Missile Development Programme (IGMDP) in 1983, cleared its user trials in 2007, nearly 24 years later. The Pinaka had a much shorter development cycle, initiated in 1986, completing its successful trials 12 years later. Bureaucratic delays have also played a part. The IAF placed its first orders for the Akash missile in 2011, nearly four years after the user trials while the army order for the first Pinaka regiment came in 2006, over a decade after field trials had been completed and the army had raised its first regiment.The two projects are cited as perfect examples of public-private sector partnerships. BEL in Bengaluru is the prime contractor for the Akash while Tata Power SED and L&T are the prime contractors for the Pinaka. Each of them, in turn, engages several other private sector firms down the value chain. Project officials estimate that at least half the cost of the orders will be ploughed back into the country in the form of taxes and salaries. “You’re talking of value-addition at the highest level because R&D creates its own multiplier effect in the economy,” says a private sector CEO. The huge time lag between repeat orders is illustrative of the dangers of a monopsony (where the government is both the largest maker and the only consumer) which disincentivises the private sector. The stop-start malaise has endured despite the NDA government’s commitment to indigenous systems and the fact that all its three defence ministers, Manohar Parrikar, Arun Jaitley and Nirmala Sitharaman, have enthusiastically backed Indian systems.

Defence minister Parrikar firmly backed the Akash and the Pinaka. He cancelled the army’s import of two regiments of Quick Reaction surface-to-air missiles and insisted that the army buy the Akash instead, initiating the case for buying 10 regiments of Pinakas in 2016. But with Parrikar’s departure from South Block in March this year, both indigenous systems lost a champion, and bureaucratic delays pushed the acquisition cases further down the horizon.

“We need a secretary-level official to monitor indigenous defence products. The job of the MoD’s department of defence production has to change from running the department to pushing indigenous industry,” says Rahul Chaudhry, chairman of the Defence Innovators and Industry Association (DIIA) and CEO, Tata Power SED.

The Akash has not been without its share of controversy. A CAG report tabled before Parliament in July this year found that the missiles had a 30 per cent failure rate. A senior Indian industry official associated with the project called it part of the ‘stabilisation process of an indigenous product’.

Swift orders are essential to continue the pace of production. Red tape has delayed Indian defence orders to a point when original equipment manufacturers have closed down their production lines.

Defence website Stratpost.com reported in 2013 that India’s nearly Rs 5,000 crore order for 145 M-777 howitzers saw a 37 per cent cost escalation of roughly Rs 1,200 crore because the manufacturer, BAE Systems, had to restart a production line it had shut down.

This is also the case with the Akash and Pinaka. “The order for the seven squadrons of Akash were to have come in March 2015, over two years ago. But we are now sitting idle on the Akash. Our supply chain is also sitting idle,” says the head of a private sector firm who supplies components to the Akash programme. Another contractor for the Pinaka rocket launcher system says he had last sourced components from his supply chain in 2009 soon after completing the last orders. “If I get the Pinaka order today, it would have been nearly a decade and I will have to locate all those old vendors.”

Support for indigenous projects ensures advanced versions can come off the line quickly. In January this year, the Armament Research and Development Establishment of the Defence Research and Development Organisation (DRDO) successfully tested a modified Pinaka Mark-2 rocket. With the addition of navigation, guidance and control kit, the earlier rocket was converted into a mini missile with fins and a guidance kit capable of hitting targets 55 km away. An Akash-2 missile with an advanced seeker and enhanced 40 km range is in the works. Given the delays in the acquisition process, however, their swift induction is by no means guaranteed.